Opening Bell: 05.20.13
Hedge Fund Owner Gets Subpoena to Testify (DealBook)
By subpoenaing Mr. Cohen, the government indicated that it was pursuing a case against SAC itself. Federal guidelines discourage prosecutors from soliciting grand jury testimony from the target of an investigation, which suggests that Mr. Cohen was being treated as if he were a potential witness against his own fund. While the authorities have not settled on a strategy, according to the lawyers and executives briefed on the case, they are pursuing an avenue that could possibly lead to an indictment against SAC, accusing it of allowing traders to carry out illicit activity over years.
Yahoo Is Planning to Buy Tumblr for $1.1 Billion (NYT)
For Yahoo and its chief executive, Marissa Mayer, buying Tumblr would be a bold move as she tries to breathe new life into the company. The deal, the seventh since Ms. Mayer defected from Google last summer to take over the company, would be her biggest yet. It is meant to give her company more appeal to young people, and to make up for years of missing out on the revolutions in social networking and mobile devices. Tumblr has over 108 million blogs, with many highly active users.
Enron No Lesson to Traders as EU Probes Oil-Price Manipulation (Bloomberg)
Shell, London-based BP and Statoil ASA, three of Europe’s biggest oil explorers, are under investigation for potential manipulation of prices in the $3.4 trillion-a-year global crude market. The involvement of McGraw Hill Financial’s Platts, which publishes pricing data, hearkens back to other pricing scandals including Enron, and more recently, Libor. “We’re making exactly the same mistakes we did with Enron, just with a different commodity,” Robert McCullough, an energy consultant, said by telephone from Portland, Oregon. “The same manipulation we saw in electricity and gas pricing is what we’re seeing in oil.”
Gold Slump Hits Silver (WSJ)
Falling appetite for the safe haven of gold has pushed the metal down 20% since the start of the year as inflation fears faded and global growth improved. In Asia, investors have zeroed in, especially on Japan where the central bank's aggressive easing measures have kick started an economic recovery and pulled up shares. The biggest moves on Monday were felt in silver, which dropped 9% in the first 10 minutes of Asian trading, touching its lowest level since September 2010. It later recouped some losses to trade down 3.9%. Silver is less liquid than gold and therefore more susceptible to such sharp moves. Spot gold fell 1.2% to $1,344 a troy ounce, and is off 8.9% since the beginning of May.
Barbie eyeing a Manhattan penthouse in search for new dream home (NYP)
Barbie is moving from her California mansion and embarking on a quest for new digs that could land her in a posh penthouse with Central Park views, makers of the doll say. Toymaker Mattel has hired a team of top-notch interior designers to create three “dream houses” — in New York, California and India — and will announce its choice in August. ... Barbie’s VP of marketing, Lori Pantel, said the story reflects the doll’s evolution as an independent woman. “As a workingwoman with over 135 careers, Barbie is proud to have a Manhattan home,” Pantel said. “It’s a glamorous work space to host movers and shakers.”
Fierce battle for corporate loans sparks US bank risk concerns (FT)
The amount of business loans made by US banks jumped to $1.55tn at the start of May, up 10 per cent compared with the same period last year, according to data from the Federal Reserve. “Every 10 years or so, banks make some horrible mistake and it usually starts with easy money,” said Mike Pinto, vice-chairman of M&T Bank, a regional lender part-owned by Warren Buffett’s Berkshire Hathaway. “We are worried about the competitive atmosphere. It creates the temptation to do silly things.”
European leveraged loan market under threat from US/HY (Reuters)
Animal identification company Allflex, German insulation firm Armacell and German industrial ceramics firm CeramTec are among a growing group of European borrowers seeking to finance buyouts via the US leveraged loan market, lured by greater liquidity, covenant-lite structures and leverage that cannot be matched in Europe. ... Deals financing via the US is a further blow to the European leveraged loan market, which has already seen a diminishing borrower base, as companies including Italian gaming company Sisal, UK fashion retailer New Look and German forklift company Kion have opted to refinance loans with high-yield bonds. "The market is hot and the pie for loans has been reduced in Europe because of less M&A, compounded by the high-yield and US markets, which are attracting previous European leveraged loan borrowers," a leveraged finance banker said.
Apple faces grilling over US tax rate (FT)
One sign of the effectiveness of Apple’s international tax planning is that the share of profits it reports in the US is lower than the share of its sales, according to Martin Sullivan, chief economist at Tax Analysts, a non-profit tax research group. Since much of its product design, marketing and other critical activities take place in the US, the share of profits booked there might be expected to be far higher, according to Mr Sullivan.
Despite curbs, China's vast hot money triangle flourishes (Reuters)
"It's very simple," said one agent surnamed Choi, dressed in sandals and ripped jeans, as he served tea in a back office where larger transactions are typically carried out. "You give me renminbi here. Then we deliver Hong Kong dollars to you in Macau. We can move tens of millions each day," he said, glancing up at six security camera images of his shop front flickering on a flat-screen TV.
Goldman to Exit ICBC With $1.1 Billion Stake Selldown (Reuters)
Goldman Sachs on Monday launched the sale of about $1.1 billion worth of Hong Kong-traded shares in Industrial and Commercial Bank of China, offering to sell its entire remaining stake in the world's biggest bank by market value. The sale by Goldman would be the final chapter in the Wall Street bank's investment into China's ICBC. Prior to its 2006 IPO, ICBC was a technically insolvent state institution, reeling from the bad loans that saddled China's financial industry.
H-1B Models Strut Into U.S. as Programmers Pray for Help (Bloomberg)
An oversight by the U.S. Congress two decades ago led to the inclusion of models in the H-1B class. A 2007 bill to put them in another category -- and let their numbers soar -- failed. Its sponsor: then-Representative Anthony Weiner of New York, who quit Congress in 2011 after engaging in lewd online behavior. While models will get less than 1 percent of the visas, the H-1Bs are increasingly coveted. Demand was so high this year that the government’s cap on applications was reached only five days after the filing period opened on April 1. “It’s the one exception that we all scratch our heads about,” Neil Ruiz, an analyst at the Brookings Institution’s Metropolitan Policy Program, said of the addition of models as the only H-1B category that requires no bachelor’s degree.
